Pennsylvania outsources Medicaid work to EDS

Pennsylvania officials have chosen Electronic Data Systems Corp. for an outsourcing contract valued at $100 million for Medicaid and other health care claims and payment processing. It is the first time Pennsylvania has outsourced the technical administration of its Medicaid program to the private sector.

Under the five-and-a-half-year contract, EDS will use its InterChange Medicaid Management Information System to process claims and payments, including those to 60,000 providers of home and community health care services for more than 19,000 aged or disabled Pennsylvania residents. In all, state and federal Medicaid funds give health coverage to 1.4 million Pennsylvania residents.

The award to EDS is 'the biggest change in our provider payment technical and business solution in 23 years,' said Peg Dierkers, deputy secretary in the Public Welfare Department's Office of Medical Assistance Programs.

The state needed an Internet-accessible system that could handle Medicaid fee-for-service claims as well as managed care claims, Dierkers said, while accommodating requirements of the Health Insurance Portability and Accountability Act. 'We believe EDS will do just that,' she said.